The Spot Exchange Rate for the British Pound Is 0

question 47

Multiple Choice

The spot exchange rate for the British pound is 0.6 pounds/dollar. The one-year interest rate in the United States is 5% and the one-year interest rate in Britain is 6%. Based on these rates, what one-year forward exchange rate is consistent with the absence of arbitrage?

• A) 0.606 pounds/dollar
• B) 0.612 pounds/dollar
• C) 0.617 pounds/dollar
• D) 0.624 pounds/dollar

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Definitions:

Klinefelter's Syndrome

A genetic condition in males characterized by an extra X chromosome, leading to various physical and reproductive issues.

Breast Enlargement

The increase in size, shape, or fullness of the breasts, which can occur naturally, through hormonal changes, or be achieved surgically.

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Groups of similar cells that perform specific functions within an organism, fundamental components of biology in structure and function.

Dominant Gene

The prevailing gene.